1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
Blababa [14]
3 years ago
11

Company X currently has a capital structure that consists of 40% equity, 20% preferred equity, and 40% of debt. The risk-free ra

te is 3% and the market risk premium is 8%. The company's equity beta is 1.1. The dividend yield for the preferred equity is 6%. The corporate tax rate is 21%, and the cost of borrowing for company X is 5%. What is the WACC for company X
Business
1 answer:
Sindrei [870]3 years ago
8 0

Answer:

14.58%

Explanation:

WACC = weight of equity x cost of equity + weight of debt x cost of debt x (1 - tax rate) + weight of preferred equity x dividend yield

According to the capital asset price model: Expected rate of return = risk free + beta x (market rate of return - risk free rate of return)

r= 3% + 1.1 x 8 = 11.8

equity = 0.4 x 11.8% = 4.72

d = 0.4 x 5 x (1 -0.21) = 1.58

p = 0.2 x 6 =  1.2

11.8 + 1.58 + 1.2 =

You might be interested in
If the Administrator were examining the actions of a particular agent to determine whether the agent engaged in churning a clien
Elena L [17]

Answer:

C) the client's objectives, financial resources, and the character of the account

Explanation:

While at the time of examining the actions of a specific agent by the administrator with respect to the commission earned would be depended upon the objective of the client, his financial resources,and the character of the account.

The character of the account represents the type of account in which the client is interest as different accounts have different commissions

So these three above objectives should be required

Hence, the option c is correct

7 0
3 years ago
The price elasticity of demand in the United States for crude oil has been estimated to be minus 0.061 in the short run and minu
Anna [14]

Answer: B. is more price elastic in the long run than in the short run because in the long run a substitute for crude oil may be found

Explanation:

The Demand for Crude oil is more elastic in the long run than in the short run because in the long run a substitute for crude oil may be found.

Crude oil is more elastic in the long run because consumers have enough time to find substitute products for crude oil. Price elasticity of demand in the short run  is low because consumers donot have sufficient time to look for substitutes , they donot have much of a choice but to take whatever price is charged by producers of crude oil

3 0
3 years ago
Read 2 more answers
Internal processes of a company contribute to the company's overall effectiveness. Identifying ways to improve internal processe
Contact [7]

Answer:

Explanation:

Internal processes of a company contribute to how effective the company runs. Looking for areas and ways to improve the internal processes will aid in building an organization that is highly efficient. The major causes needs to be known.

Ways of identifying the root causes might not be possible until basic analysis is carried out or sometimes it might be visible depending on the major problem facing the organization internally.

Internal process of a company increase the effectiveness of such company, identifying how to improve these internal processes helps to build an organization that is highly efficient.

6 0
3 years ago
Suppose that Dillon derives 40 utils of total utility from eating 5 hotdogs and 42 utils of total utility from eating 6 hotdogs.
gavmur [86]

Answer: The marginal utility is 2

Explanation:

Utility is the satisfaction derived from the consumption of a particular commodity. Total utility is the total satisfaction derived from the consumption of a particular commodity. Marginal utility is the extra satisfaction that a consumer gets from consuming a product. Utility is measured in utils.

Marginal utility increases with an extra consumption of a good at first but later it begins to reduce as the extra good consumed doesn't really have give the consumer enough satisfaction anymore.

Regarding the question, eating 5 hotdogs gives 40 utils and eating 6 hotdogs gives 42 utils.

The marginal utility is the extra utils which will be 42-40 which gives 2 utils.

3 0
3 years ago
Nielson Motors sold 10 million shares of stock in an SEO. The market price of Nielson's stock at the time was $37.50. Of the 10
Yuliya22 [10]

Answer:

a. $144 million

Explanation:

The computation of the amount of money raised is shown below:

But before that we have to find out the amount raised and underwriting fees which is given below:

Amount raised by company is

= 4 million × $37.5  

= $150 million

And,

underwriting fees is

= $150 million × 4%

= $6 million

So, amount raised by the company is

= $150 million - $6 million

= $144 million

We deduct the underwriting fees from the raised amount

5 0
3 years ago
Other questions:
  • The Playa Company has the following information in its records. Certain data have been intentionally omitted ($ in thousands). R
    11·1 answer
  • Explain how organizations manage the changing environment​
    14·2 answers
  • If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by 2 percentage point
    7·1 answer
  • A country is attempting to measure its growth rate in technology. This is: possible to estimate using the growth accounting equa
    5·1 answer
  • A small businessman tries to buy a computer to help with the job. He needs a small computer, but the expected growth of the busi
    10·1 answer
  • Which of the following weakens the government control in the marketplace?
    10·2 answers
  • UPS, a delivery services company, has a beta of 1.6, and Wal-Mart has a beta of 0.9. The risk-free rate of interest is 6% and th
    6·1 answer
  • Laramie Corporation has acquired a property that included both land and a building for $ 570 comma 000. The corporation hired an
    12·1 answer
  • Ji-woo has a new credit card. She wants to use it for online shopping. What are three things that make this a poor choice
    12·1 answer
  • A good investment should do one or both of which two things? a. grow in value or produce income b. raise prices or increase dema
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!